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Watching a video related to Production Possibilities Frontier.
hey unique on students this is mr. Clifford. Welcome to econ movies
In previous episodes we learned about scarcity and choices. Now let's see how these concepts affect producers by looking at Disney Pixar's monsters Inc
The future is bright that monsters incorporated we warm your home we like your city carefully matching every child to their ideal monster to produce superior screen refined into clean dependable energy
Every time you turn something on monsters incorporated is there to produce things
We need resources and economists argue that all resources are scarce
Sometimes these resources are called the factors of production they are land, labor, capital which is like the machinery to produce things, and then someone to bring it all together the entrepreneur
This company has been in my family for three generations
Economists like to explain the idea of scarcity by drawing something called the production possibilities curve (PPC)
The PPC is a graph that shows how an economy can use its resources to produce two different goods
So let's assume that Monstropolis can only produce two different products scream energy and sushi
This graph shows the production possibilities the different combinations of the two goods that can be produced using all of their resources
As you can see they can put all their resources produce stream energy or they can produce all sushi or some combination in between
But notice they can't get any combination outside the curve
They can't put all their resources into producing stream energy at the same time put all those resources into producing sushi.
So any combination out here outside the curve is impossible
Now's a good time to talk about the difference between consumer goods and capital goods
Consumer goods are obviously made for consumers made for direct consumption
These are things like cars odorant and snow cones
No cool no no no don't worry it's lemon
Capital goods are made for indirect consumption and are basically tools and machines produce consumer goods
Now let's analyse the big problem in Monstropolis: the screen shortage. They clearly explain the cause of the shortage “mmm stays they just don't get scared like we used toâ€. This means that the main resource produce scream energy.
The children are less productive what happened kid all this done speech she got this close to me daddy she was always saying I could have a dad
Now back to the graph what happens to the production possibilities curve. If a resource becomes less productive the entire curve shifts inward
Now you should be thinking to yourself. I can see why we're producing less scream energy but why are we producing less sushi
The reason why is because scream energy is a capital good it's a resource. If you don't have scream energy you can't even run a restaurant. Without scream we have no power
Now what if there was some new technology that made the resources that produce scream energy more productive?
that is what, if there's a way to get more scream
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